My idea is to buy an used mac mini to act as a NAS and to be connected to my tv as a htpc (xbmc or plex) streaming 1080p movies.The mini would also be used as a time machine to backup files from a macbook pro. I'm wondering if I can get rid of my wifi router (it's broken) and use the mini for this task. Two laptops, one ipad and iphones would connect wirelessly to this network. Few questions:

1. What would be the cheapest version of mac mini for this purpose? I found one on ebay (MID-2010 - 8 GB RAM (upgraded) - 320 GB HDD, 2.4 GHz) which is reasonable priced at £230. But maybe I don't even need 8GB of RAM...
2. Does the internet connection sharing of Mac OS X have ample security for this (wpa2? any special firewall configuration options? etc.)
3. Any 3rd party apps that would be better than what is built in?
4. Is this advisable? Are there any disadvantages of using a mac instead of a normal router? I know there isn't any physical separation of the firewall and my inner network, but it seems if I configure this correctly, there wouldn't be issues.
5. Can the mini's built in airport card handle all the packets between all the connected devices like a normal router?

Sorry about all this questions... I just want to make sure the mini is the best option for my needs.

Actually you can replace a router with a mini but you have to have all your devices being able to use network sharing which the iPhone doesnt support the ipad wouldn't help you at all there as well i can recommend a better setup.

Purchase a new/used mini your choice your model

get a airport router connect a external usb hard drive to the router and use it as a time machine backup.

Now for video streaming depends on what you want to stream from

i would recommend plex and xbmc i would also install vlc and mplayer x because both have there plus and minus factors.

1. mplayerx supports all video formats but won't convert a video to another format

My idea is to buy an used mac mini to act as a NAS and to be connected to my tv as a htpc (xbmc or plex) streaming 1080p movies.The mini would also be used as a time machine to backup files from a macbook pro. I'm wondering if I can get rid of my wifi router (it's broken) and use the mini for this task. Two laptops, one ipad and iphones would connect wirelessly to this network. Few questions:

1. What would be the cheapest version of mac mini for this purpose? I found one on ebay (MID-2010 - 8 GB RAM (upgraded) - 320 GB HDD, 2.4 GHz) which is reasonable priced at £230. But maybe I don't even need 8GB of RAM...
2. Does the internet connection sharing of Mac OS X have ample security for this (wpa2? any special firewall configuration options? etc.)
3. Any 3rd party apps that would be better than what is built in?
4. Is this advisable? Are there any disadvantages of using a mac instead of a normal router? I know there isn't any physical separation of the firewall and my inner network, but it seems if I configure this correctly, there wouldn't be issues.
5. Can the mini's built in airport card handle all the packets between all the connected devices like a normal router?

Sorry about all this questions... I just want to make sure the mini is the best option for my needs.